Why regulating Wall Street isn’t enough

Our Founding Fathers were all about preventing tyranny as they were throwing off the yoke of the British Empire; the despotism of Crown and Church, they could see it a million miles away and designed our government to prevent it.

Their remedy? Checks-and-balances, compartments of government self-regulated through inter-agency skepticism and scrutiny.

Given the recent Wall Street bailouts in the amount of trillions upon trillions, deficit spending and skyrocketing debt, it seems as if an important protection to help Washington be more accountable is missing from the Founder’s design. But it isn’t. It just hasn’t been used.

A consensus has emerged on how to fix the rules in our broken financial system - Regulation. This response to the worst financial crisis since the Great Depression sees the deregulation that had occurred in the banking and mortgage industry - combined with good ol’ fashioned greed - as the primary cause of the collapse. It follows then, that by restoring key corporate oversight, a future economic meltdown will be averted. Only regulating Wall Street won’t be enough.

Wall Street had a silent partner in creating this mess: Washington, DC. Without the collusion between Wall Street and Washington, this debacle wouldn’t have been possible. The lobbyist driven repeal of important protections such as the Glass Steagall Act in 1999 or the unregulated mania of corporations like AIG, Bear Stearns or Lehman would never have occurred without a complicit Congress, essentially bribed to be asleep at the switch. We have witnessed, quite literally, the ‘Enron-nization’ of the American economy.

In our nation’s history, the Federal government has offered top-down guidance to the States. Sometimes in the form of a moral check-and-balance as in the case of women’s voting rights or guaranteeing African-Americans entry into schools in the South. America became stronger through these interventions. But the reverse, a restraining check-and-balance to an excessive Federal government, is also necessary. When Washington has grown beyond its means, overreaching and incapable of self-correction, the people must intervene.

This was the purpose of the convention clause of Article V of the US Constitution, to give the people an opportunity to offer solutions to a recalcitrant Congress unwilling or unable to act. When corruption has become institutionalized into the Federal government, the States can petition for a convention to propose amendments to the Constitution, a process occurring outside of Washington, bypassing the entrenched corruption. Before becoming law, amendments would have to be ratified by three-fourths of the States, eliminating any extreme or radical proposals.

But ideas like a Balanced Budget Amendment, which would help to root out abuse and cronyism inherent in the system today, could be introduced and seriously debated through our nation’s first Article V Convention. Delegates would assemble, C-SPAN would cover it, we would all get educated a little more and our representative democracy reinvigorated. There is a critical reason why the convention clause exists, and the Framer’s put it there not to be ignored, but to provide a “peaceful alternative to a violent revolt” during times of strong popular frustration with the Federal government.

Constitutional scholars believe we have been denied our right to a convention. To date, there have been 754 valid applications from all 50 States for an Article V Convention that have hit the doorstep of Congress, far surpassing the two-thirds threshold needed (34). The research documenting these applications was completed last year by an intrepid non-partisan group of legal experts, a retired Michigan Supreme Court Justice and impassioned citizens from every State. The Friends of Article V Convention (FOAVC.org) assert that Congress has not only failed in its non-discretionary duty to issue the call, but is purposefully quashing the convention as a perceived (and real) threat to its power.

Aside from the partisan polemics surrounding the recent Tea Parties, it’s clear that millions of Americans of all political stripes are voicing deep concerns for the future of our country. They see the massive influence of lobbying power, industries writing their own laws, shameless earmark abuse and trillion dollar bailouts as the symptoms of a broken system.

President Eisenhower once remarked about Article V,

“Through their state legislatures and without regard to the federal government, the people can demand a convention to propose amendments that can and will reverse any trends they see as fatal to true representative government.”

It may be time to finally heed the original design our Founding Fathers built into the law of the land for just such an occasion - they did have a couple things right after all.